Shareholders will have the right to buy three new shares for every existing 10 shares they own, at 300p apiece. This is a 35pc discount to Wednesday's closing price of 464p.

The market liked the deal, with the shares surging 8pcafter the announcement. The deal has a number of positives that have increased the scope and the scale of the group.

Eurovet is a veterinary pharmaceuticals business based in the Netherlands, which operates in both the pet and farm animal markets. Last year, it had sales of €76.8m and this generated pre-tax profits of €8.1m. Importantly, the deal will boost earnings in the first year of ownership.

As well as bringing new products into the group, the purchase brings a direct sales force – with a particular strength in Germany.

At present, Dechra sells its pharmaceuticals via third parties. The deal will enable Dechra to sell its products through the Eurovet network and products from Eurovet can be sold via Dechra's sale teams. This will bring revenue synergies and should boost margins in the combined entity. The combination of the two businesses is also expected to strengthen greatly Dechra's presence in Denmark, the Netherlands and Belgium.

Eurovet has approximately 150 products, of which 110 are its own. Of these, the main category is antibiotics for livestock.

The combined portfolio for pets is entirely complementary, with no overlap, and the purchase brings products for large farm animals into the group. Previously Dechra has held back from entering this market because it has not had critical mass. This purchase brings a sizeable product portfolio into the group. Eurovet's sales by product category are 62pc in farm animals, 33pc pets and 5pc veterinary instruments.

This is the second major international purchase Dechra has made in 18 months. In October 2010, the company bought US group DermaPet to give it a toehold in that market.

The purchase brought a number of interesting products into the group, such as TrizUltra, an anti-fungal and antibacterial skin treatment, DermaLyte, a shampoo for bathing allergic pets, and MalAcetic, a product for cleaning animals' infected ears.

Questor first recommended the shares at 427.9p on October 25, 2009. At this entry price, an investor who takes up their rights will have a theoretic ex-rights price (Terp) of 398.4p. The shares were last recommended as a buy in January at 518p, and investors who bought in then will have a Terp of 467p. This means all investors will be sitting on a profit after they take up their rights. The Terp based on Wednesday's closing price is 426.15p.

Shareholders need to approve the acquisition – but not the rights issue – at a meeting, expected "on or around" May 14. Questor recommends investors approve the deal and take up their rights.